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The Australian Caf and Restaurant Industries Market Snapshot

MARKET OVERVIEW

Market Conditions

Duetothediscretionarynatureorestaurantspending,theindustryhasaceddifculttradingconditionsasaresultothe

recenteconomicdownturnwherebyconsumerschosetosavebyeatingathomemoreoten.Further,alreadylowmargins

weresqueezedasconsumerssoughtvalueormoneyinoodpurchases.

Incomparison,Australiasloveoqualitygourmetcoee,whichisseenasanaordableluxury,hasresultedinstrong

growthinthecaindustryduringthistime.Resultsindicatethat1billioncupsocoeeareconsumedincaseachyear

inAustraliaandout-o-homeconsumptionisontherise.

Witheconomicconditionssettoimprove,strongergrowthisexpectedinboththecaandrestaurantindustriesoverthe

next5yearsandbeyond,aswellasanincreasedpresenceobothinternationalplayersandranchises.

Competitive Landscape

TheAustraliancaandrestaurantindustriesarehighlycompetitive,mainlyderivedromlowbarrierstoentryandhigh

industryragmentation.Inbothindustriesthelargestplayersrepresentlessthan10%oindustryrevenue,and91%oca

andrestaurantbusinesseshavelessthan20employees.

Inthecaindustry,almostallsignifcantnetworksusearanchisemodelasaprimaryorcomplementarybusinessstrategy

includingGloriaJeansCoees,McDonaldsMcCae,HudsonsCoeeandCoeeClub.RestaurantsincludingLaPorchetta,

OutbackJacksandWagamamahavealsosetupsuccessulranchisesystemsinAustralia.

Operatorswithinthecaandrestaurantindustriescompeteonprice,qualityandcustomerservice.DCStrategyhasound

thataranchisingmodelcansubstantiallyimprovethesecriticalactors.

Opportunities for Growth

Understandingyouruniqueoertothecustomerstatisticsshowthatspecialisedstoreshaveotenoutperormedinternational

brandswhohaveailedtounderstandtheAustralianmarketandnotalteredtheirproduct/serviceoeringaccordingly.

Increaseproftmarginstakeadvantageoavailablesystemadvancementswhicharedesignedtoimprovebusiness

processesaswellasminimisinglabourcostsandwastage.

Buildyourbrandtechnologyhaspresentedtheopportunityoroperatorstoreachagreaterproportionothemarkettoenhancetheircompetitiveadvantageandincreasebrandrecognition.

DCStrategyhasseennumerousbusinessesenterandcaptureconsiderablemarketsharebyocusingontheseactors,

despitenothavingthefrsttomarketadvantage.

2011 Total Revenue $19.3bn

2011 Average net prot margin 8%

2011-2012 Historical annual growth rate 1.1-2.6%

2012-2017 Forecast annual growth rate 3.0-5.7%

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The importance of franchising

Theretailsector,especiallyoodretailing,hasbeenthedominantsub-sectororanchisingandthistrendissetto

continue.The2010PotentialFranchiseeSurveyound53%orespondentslistedood/restaurants/caesastheir

preerredindustrytopursue.

Inthe2010FranchisorExpansionStudy,ranchisorssawtake-awayood(17%)andcoee(12%)asthetopindustry

growthareas.Coeehasincreaseditspopularityinrecentyears,withonly3%seeingitasagrowthareain2007.

Franchisinghasprovedtobeasuccessulbusinessmodelorbusinesseswithauniqueoer,systemandbrandlookingto

expandrapidly.Forexample,XpressoDelight,whichinstallscoeemachinesintoofces,hasbuiltanetworkoover100

ranchisesinashortperioddueto,amongstotherthings,theiruniqueoerandspecifcmarketingsystem.

Forecastssuggestthatranchiseswillcontinuetoincreasetheirconcentrationintheseindustriesovertime.

The benefits of franchising

The benets of franchising to the franchisor include:

Greateravailabilityocapitalorexpansion

Incomereceivedthroughroyaltiesandotherees

Motivatedandcommittedranchisees,comparedwithstoremanagers,resultinginanuplitinsales

Increasedpurchasingpowerromsuppliersasthenetworkgrows

Controloverdistribution

Strongerimageandmarketingpresence

Increasedknowledgebaseandnewideaswithinthesystem

The benets of franchising to the franchisee include:

Establishedbrandidentity

Provenbusinessmodel

Lessriskobusinessailure

Morevaluablebusinessuponexit

Further information

DC Strategy is widely recognised as the regions premier ranchise consulting and legal frm.

Our people have helped create the ranchise systems and documentation or many o Australias leading ranchise networks and

have assisted ranchise networks to expand internationally. We have worked or clients such as:

Hudsons Coee Grilld

Shingle Inn Shuji Sushi

Campos Coee

For further information and to discuss growth opportunities for your business contact DC Strategy on:

0386157208 0282208701JohnDiNatale NasserAbduBusinessDevelopmentExecutive BusinessDevelopmentExecutive

Sources:DCStrategyResearch,IBISWorldAustralia,Datamonitor,www.ranchise.net.au

The Australian Caf and Restaurant Industries Market Snapshot (Continued)